Nicholas Oulton's picture
Affiliation: 
London School of Economics
Credentials: 
Senior Visiting Research Fellow

Voting history

Juncker's State of the Union Address

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Question 2: Do you agree that the euro has had more benefits than costs?

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Answer:
Strongly disagree
Confidence level:
Very confident
Comment:
It is well known that those who pushed for the creation of the euro were well aware of its flaws. But they hoped to use it as a lever to create a deeper political and economic unit, a United States of Europe in fact. The euro was severely tested by the global financial crisis and found wanting. So far the push for fiscal as well as monetary union has met with adamanine resistance from the one country whose agreement is necessary, Germany. I don't expect this to change in the foreseeable future. Meanwhile we will probably continue to see the rise of political forces which are fundamentally hostile not just to the euro but to capitalism as well.

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Question 1; Do you agree that euro membership should be compulsory for all EU member states?

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Answer:
Strongly disagree
Confidence level:
Very confident
Comment:
The euro has been disastrous for Europe so trying to make it compulsory for all member states will only make matters worse. Making it compulsory means amongst other things setting aside the Danish optout (which could perhaps be done when the Danes produced the right answer after a sufficient number of referendums). However if I believed that it would be good for Britain if the EU broke up then I would be inclined to answer the opposite: make it compulsory.

Wages and economic recoveries

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Question 2: Do you agree that the different behaviour of UK real wages relative to Eurozone wages during the Great Recession is in large part due to the UK having different labour market policies?

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Answer:
Agree
Confidence level:
Very confident
Comment:
If the comparison is with the Eurozone, then different labour market policies must be part of the answer. But there is also a contrast with the US to explain. In the latter participation has continued to fall even though the unemployment rate has followed a similar path to the UK's. The UK and the US are usually classified as having flexible labour markets but the labour market response to a similar-size shock has been different. Part of the explanation for the differences with both the Eurozone and the US is the depreciation of sterling which followed the shock and which allowed a relatively painless fall in real wages (at least this is what an old Keynesian would argue). The Eurozone, like the US, is a much more closed economy than the UK so a helpful exchange rate response was much less likely.

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Question 1: Do you agree that lower real wage growth was beneficial for employment levels during the Great Recession?

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Answer:
Agree
Confidence level:
Very confident
Comment:
UK employment growth has been very strong during the recession and subsequent recovery. The unemployment rate rose initially but then fell back to the pre-crisis level or even below it. So it seems very unlikely that aggregate demand has been deficient for most of this period. If there was some tendency for the fall in real wages to reduce demand, there must have been other factors working in the opposite direction, such as the automatic stabilisers or indeed the rise in employment itself.

A “new” UK industrial strategy ?

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Question 2: Do you agree that the UK needs a new regional policy?

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Answer:
Strongly agree
Confidence level:
Very confident
Comment:
Regional disparities in GDP per head seem to be widening. So something needs to be done to reverse this trend. Congestion and planning regulations mean that simply encouraging people to move South to take advantage of better wages and jobs is not going to work. But I doubt whether Enterprise Zones are going to be a big part of the solution. In principle the Northern Powerhouse is the right sort of approach. This is what the French have done in developing "poles de croissance" such as the Toulouse region. In practice, the Northern Powerhouse is proceeding at a glacial pace.

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